(adds detail, quotes, Hungarian bond data)
BUCHAREST, Jan 15 (Reuters) - Most central European
currencies fell against the euro on Thursday, as fresh data
reinforced rate cut bets in the region, and dealers attributed a
firming in Romania's leu to central bank intervention.
Losses were led by the zloty <EURPLN=> in Poland, where
central banker Dariusz Filar said he expected inflation to fall
to around 2.5 percent in the second half of this year, which
added room for more rate cuts [].
By 0944 GMT, the zloty was 0.8 percent weaker at 4.208 per
euro, off an intra-day low of 4.2467.
In Hungary, data showed inflation fell more than forecast to
3.5 percent in December, which also bolstered expectations for a
new rate cut next week []. The forint <EURHUF=> was
down 0.4 percent at 279.6 per euro.
"Today's data adds to the view that there is no need to
worry about inflation, which is now within the target band and
likely to return to target during the coming quarters as the
recession continues," said Anders Svendsen of Nordea.
"Thus, we expect rate cuts as fast as possible without
jeopardising financial stability."
The global financial crisis has hammered the region since
late last year, as slowing demand in the recession-hit euro zone
damaged trade deficits, slowed inflation and created
expectations for a significant economic slowdown.
The switch in focus from inflation to recession fears forced
central banks in eastern Europe to cut rates in successive
moves, adding to bearish pressure on currencies.
The Czech crown <EURCZK=> fell 0.7 percent, a day after
falling to its lowest since November 2007 because of a record
drop in November industrial output.
Czech December PPI dropped as expected [], while
the current account came out just below forecast with a deficit
of 8.7 billion crowns [].
Some central bankers said on Wednesday the economy might be
sliding toward or even below the bank's alternative, pessimistic
outlook showing 0.5 percent growth this year. []
Hungary's economic decline may also be deeper than
previously thought [].
C.BANK HELPS LEU
In other trade, Romania's leu <EURRON=> was 0.8 percent up,
bucking the trend as dealers cited covert central bank
intervention to help the unit, which might otherwise have hit
new lows on poor industry data [].
"The central bank intervened indirectly," one dealer said.
"Otherwise the leu would have fallen in line with the region and
also due to poor industrial output data."
Romania also posted data on the current account deficit
[], its main economic problem. Its growth slowed as
expected, helped by a weaker currency. However, it remained high
and poses financing risks.
In debt markets, Hungarian bonds were largely steady on
Thursday, but with traders eyeing next week's rate decision.
"There are bids at the long end, so we could see a bit of a
flattening (in the curve) now," a trader said.
"If the central bank cuts rates on Monday and the market
believes that they will continue easing ... then people will
start buying bonds," he added.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 27.208 27.026 -0.67% -1.67%
Polish zloty <EURPLN=> 4.208 4.174 -0.81% -2.21%
Hungarian forint <EURHUF=> 279.6 278.5 -0.39% -5.74%
Croatian kuna <EURHRK=> 7.338 7.327 -0.15% +0.37%
Romanian leu <EURRON=> 4.268 4.301 +0.77% -5.94%
Serbian dinar <EURRSD=> 92.827 92.14 -0.74% -3.61%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -3 basis points to 126bps over bmk*
4-yr T-bond CZ4YT=RR -4 basis points to +123bps over bmk*
8-yr T-bond CZ8YT=RR -3 basis points to +119bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +23 basis points to +829bps over bmk*
5-yr T-bond HU5YT=RR +23 basis points to +783bps over bmk*
10-yr T-bond HU10YT=RR +23 basis points to +623bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1144 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
*Benchmark is German bond equivalent.
All data taken from Reuters at 1030 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
For related news and prices, click on the codes in brackets:
All emerging market news []
Spot FX rates
Eastern Europe spot FX <EEFX=> Middle East spot FX <MEFX=>
Asia spot FX <ASIAFX=> Latin America spot FX <LATAMFX=>
Other news and reports
World central bank news [] Economic Data Guide <ECONGUIDE>
Official rates [] Emerging Diary []
Top events [] Diaries [] Diaries Index []
(Reporting by Reuters bureaus, writing by Marius Zaharia;
Editing by Ruth Pitchford)
